With 60 Million Downloads, Outfit7 Builds an App Empire for Children of the iPad Generation

Teenage Mutant Ninja Turtles, legos and Transformers may have filled the childhood bedrooms of today’s entrepreneurs but Slovenian company Outfit7 is betting that the toy of choice for kids nowadays is a smartphone or the iPad.

And they have 60 million downloads to prove it.

Outfit7 is behind a series of talking character apps that often populate the best-seller list on both Android and iOS. Their flagship character is a skinny gray cat called Talking Tom that drinks milk, purrs if you rub him and sometimes threatens to scratch your iPad screen with his sharp claws. The most popular thing to do with Tom is to record your voice and have him repeat your words in his high-pitched voice.

For a company that was founded a year ago and is basically made of 20 engineers coding out of Slovenia, Outfit7 has lofty goals. Its competitors aren’t casual games, but rather the stuffed animals and dolls that line the shelves of Toys-R-Us.

The vision is to make Talking Tom as ubiquitous and as cherished by children as characters like SpongeBob SquarePants or Mario and Luigi. Already, a search for “Talking Tom” on YouTube produces more than 7,000 user-created videos of him speaking in tongues or singing Lady Gaga’s Pokerface. A few of them have been seen more than 500,000 times. He’s even made a cameo on ABC’s television show Modern Family.

“It took Mattel 50 years to sell more than 1 billion Barbie dolls,” said chief executive Andrej Nabergoj. “This year, we think we can ship 500 million toys.”

The company makes what it considers its most valuable characters and intellectual property free like its trio of talking bacteria John, John and John. Then it offers richer interaction if users upgrade to the paid version.

Talking Tom has seen 40 million downloads and Nabergoj said about 10 percent of them convert to the paid version, which costs $0.99 on iOS. Other characters that are considered less valuable like Talking Harry the Hedgehog are always paid and usually cost $0.99. Across its entire portfolio of characters, the company says it has more than 10 million monthly actives and it’s aiming to launch 18 more apps in the next year.

On Android, the picture is very different since paid downloads are low because of Google’s myriad problems with the platform’s payments infrastructure. About one-third of Outfit7’s revenues come from advertising. Virtual goods are coming soon, and while Nabergoj wouldn’t say what they’ll be, it’s not too hard to imagine that kids could end up buying virtual food, collars or accessories for their animals.

Outfit7’s backstory is interesting — oddly enough, most of the company’s technical talent are search engineers. Nabergoj himself came from building Facebook quiz apps that had 30 to 40 million monthly actives at their peak.

He initially worked with Outfit7 as an advisor. But after the company launched its first app in July, the team realized they had created an entirely new category. For comparison’s sake, it took Rovio a little over a year to sell 50 million downloads of its smash hit Angry Birds. Outfit7 has done more than that in half the time. Nabergoj quickly came on-board full-time.

Outfit7 also opened an office in Palo Alto where Nabergoj is trying to put together a management team that can support the company’s ambitions to franchise its most popular characters and to acquire other talented startups.

He’s less interested in venture capital funding as Outfit7 is earning more than enough in revenue to support its team with 12 million downloads a month. He’s also on the lookout for high-quality apps that match the company’s child-friendly demographic to cross-promote throughout Outfit7’s network.